Labor Market and Growth Implications of Emigration: Cross-Country Evidence

Abstract

The number of migrants residing in 30 OECD countries increased from 42 million to nearly 59 million over 1990-2000. This paper studies the impact of emigrants with different education levels on their home countries' employment-population ratio, GDP per worker, and its factors obtained by a production function decomposition. It uses migration data from 195 countries of origin to 30 major destination OECD countries in 1990 and 2000 and applies two different econo- metric approaches to estimate this impact. The frst approach discusses how changes in native population due to emigration affect the growth of macroeconomic variables and constructs an instrument based on pull factors of migration and migrants' networks to correct for endogene- ity bias. The second approach estimates the elasticities of variables of interest with respect to emigration rates and uses instruments widely discussed in the literature: dummy variables for being in a colonial relationship; low-income countries; whether the migrant sending country's offcial language is English; distance; and country size. Estimation results across two economet- ric approaches indicate that total emigration rates increase GDP per worker in all countries, non-high income countries, and low and lower middle income countries, primarily driven by im- provements in total factor productivity (TFP). In contrast, there is no robust significant impact of emigration on the employment-population ratio across different specifications.

Citation

Hovhannisyan, S. Labor Market and Growth Implications of Emigration: Cross-Country Evidence. The World Bank, Washington DC, USA (2012) 29 pp.

Labor Market and Growth Implications of Emigration: Cross-Country Evidence

Help us improve GOV.UK

Don’t include personal or financial information like your National Insurance number or credit card details.